The Iran war sent oil prices spiralling above US$100 a barrel on March 9, after Tehran fired a new barrage of missiles at Israel and its crude-exporting Gulf neighbours. Photo / AFP
The Iran war has sent oil prices spiralling above US$100 ($169) a barrel after Tehran under new leader Mojtaba Khamenei fired a new barrage of missiles at Israel and its crude-exporting Gulf neighbours.
On the first day in power for Khamenei, the 56-year-old son of slain leader Ali Khamenei, Iran renewed its missile and drone attacks on Saudi Arabia, Bahrain, Qatar, the UAE and Israel.
Another missile was fired at Nato member Turkey, the second such incident in five days, with the alliance’s air defences intercepting it before it could hit its target.
With the key shipping route through the Strait of Hormuz off Iran remaining closed to almost all oil tankers, the price of benchmark crude oil contracts spiralled 10% to their highest levels since Russia’s invasion of Ukraine in 2022.
EU Economy Commissioner Valdis Dombrovskis warned that a “more protracted” war would lead to a “stagflationary shock” of high inflation and low growth for the world economy.
Finance ministers from the G7 group of rich nations were due to meet later in the day to discuss releasing strategic oil reserves to try to dampen prices, which are up around 40-50% since the US and Israel launched their first attacks.
Stock markets around the world are also diving, hitting pension funds and savings, while inflation caused by higher oil prices will push up the price of goods for consumers everywhere.
Queues at petrol stations have been seen as far afield as Vietnam and France as drivers anticipate higher prices, raising the risk of shortages.
“I think we are all seeing right now the threat this clerical regime poses to the region and to the world,” US Secretary of State Marco Rubio said on Monday.
“They are trying to hold the world hostage.”
Iran faced a fresh blitz of US and Israeli strikes after its Assembly of Experts, the top clerical body, appointed its first new supreme leader in 37 years.
Iran’s security chief Ali Larijani told Khamenei that his appointment had “caused the hostile and warmongering enemies to despair”.
US President Donald Trump told the New York Post he was “not happy” about the appointment on Monday after telling ABC News on Sunday that “if he doesn’t get approval from us, he’s not going to last long”.
After similar threats from Israel, a Chinese foreign ministry spokesman warned that Beijing opposes targeting leaders and insists “Iran’s sovereignty, security, and territorial integrity should be respected”.
Ali Ansari, a professor of Iranian history at the University of St Andrews in Scotland, said the new Supreme Leader was a hardliner who had “been involved in all the most violent repressions that have taken place over the last 15-16 years”.
He said it was possible but very unlikely that he might attempt to make a deal with the Americans and Israelis to end the war, or even take a more modernising approach within Iran.
“But I find it very difficult to imagine because at the moment, the regime is probably thinking ‘if we show weakness, we’re finished’,” he said.
Russian President Vladimir Putin on Monday pledged “unwavering support” to Khamenei amid unconfirmed US media reports that Moscow has been providing targeting intelligence to the Islamic Republic’s military.
Oil traders, policymakers and central bankers are all watching the Middle East for news about Gulf energy infrastructure which is crucial for the world economy.
Larijani said that security within the strategic Strait of Hormuz could not be guaranteed for as long as the war continues.
French President Emmanuel Macron said that his country and allies were working to put together a “purely defensive” mission to reopen the strait through which nearly 20% of the world’s crude oil usually transits.
He said the mission would be aimed at escorting vessels “after the end of the hottest phase of the conflict”, but experts say it would also mean putting navy vessels at risk of incoming fire from the nearby Iranian coast.
Following strikes on Bahrain’s Al Ma’ameer oil facility that ignited a fire, the country’s state-owned energy company Bapco joined its counterparts in Qatar and Kuwait in declaring “force majeure” – a warning that events beyond its control may lead it to miss export targets.
The Saudi defence ministry said Monday it had thwarted a drone attack targeting an oilfield in the kingdom’s east, near the Emirati border.
As governments around the region seek to protect their image as safe havens, Qatari authorities said they have arrested more than 300 people for sharing images online and what they described as “misleading information”.
The announcement followed similar but smaller scale arrests and warnings issued in Bahrain, Kuwait, Saudi Arabia and the UAE.
At least one Israeli was killed on Monday, a man said to be approximately 40, when shrapnel showered a building site, emergency services said.
At least 10 explosions were audible in Tel Aviv, Israel’s commercial hub, after the military announced it had detected missiles inbound from Iran.
The multi-front war also intensified in Lebanon.
Iran-backed militants Hezbollah said they were engaging Israeli forces who landed in eastern Lebanon on 15 helicopters across the Syrian border, and more strikes hit the southern districts of Beirut.
Large plumes of smoke rose from the area after the Israeli military warned it would destroy branches of Al-Qard al-Hassan, a Hezbollah-linked financial firm.
Lebanon was drawn into the conflict last week when Hezbollah attacked Israel in response to the killing of the elder Khamenei.
-Agence France-Presse